Corporate structure for investment funds to be launched

A new corporate structure for investments funds that will put Singapore in the same league as other global fund hubs will be launched later this year, said Education Minister Ong Ye Kung yesterday.

The structure, known as the variable capital company or VCC, aims to entice more fund managers to base their funds and run their fund management activities in the Republic.

"This will further deepen our fund servicing ecosystem, and create new business opportunities for a wide range of professions such as lawyers, accountants, tax advisers, fund administrators and custodians in Singapore," said Mr Ong at the annual Investment Management Association of Singapore conference.

A Bill to legalise the VCC structure was passed last October. The Government estimated then that the framework could create over 1,000 new jobs for the fund management industry in the first two years of its introduction.

Mr Ong, who is a Monetary Authority of Singapore board member, outlined in a 15-minute keynote speech how Singapore is well poised to be a fund hub in Asia.

He noted that while global growth is forecast to slow down this year, in part due to the ongoing trade tensions between the United States and China, Asia remains a bright spot for investments.

Assets under management in the Asia-Pacific are expected to almost double from 2017 to about US$30 trillion (S$41 trillion) in 2025, he observed. And Singapore will benefit from this trend.

He said the investment management sector has grown 15 per cent year on year between 2012 and 2017 to reach a total of $3.3 trillion of assets under management.

Fresh financing demands for regional infrastructure projects are also driving industry growth here.

"Currently, more than 90 per cent of the infrastructure investment in Asia is financed by governments. There is now a strong realisation of the need to mobilise private capital," he said.

To this end, the Singapore Government has set up an office called Infrastructure Asia to connect local and international participants in infrastructure development and enable information exchange and access to professional services.

Mr Ong noted that Singapore's strong support for technology and innovation, as well as its concerted efforts to develop skills and talents, will also help the fund management industry in the medium term.

But beyond that, he believes that Singapore's societal ethos of pursuing economic growth while improving the well-being of the people is what makes the country most attractive to investors.

"In Singapore, our people fundamentally wish businesses well because we know all our jobs and incomes are at stake... At the same time... businesses in Singapore by and large also have a desire to contribute to society," he said. Such ethos, and the ability to hold investors, industry and people together, will bode well for Singapore in the long term, he concluded.

A version of this article appeared in the print edition of The Straits Times on May 10, 2019, with the headline 'Corporate structure for investment funds to be launched'. Print Edition | Subscribe